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2007 Asia - Telecoms, Mobile and Broadband in China


Attention: There is an updated edition available for this report.

This annual report provides a comprehensive overview of the trends and developments in telecommunications and digital media markets in the booming market of China. Subjects covered include:

Key statistics and selected analyses;
Market and industry overviews;
Regulatory environment, including progress on urgently needed market reforms;
Major players (fixed and mobile);
Infrastructure, including the planned rollout of 3G;
Mobile voice and data markets, including development of local 3G platform, TD-SCDMA;
Internet, VoIP, IPTV;
Broadband (FttH, DSL, cable TV, wireless);
Convergence and digital media.


China’s telecommunications sector continues to be dynamic across most segments of the market. With the mobile sector still expanding at close to 20% annually coming into 2007, the long-awaited licensing of 3G services is getting closer and will surely give the market yet another boost. There remains a continuing need for major industry restructuring and there are expectations that the government will take action on this front in conjunction with the issuing of 3G licences.

With all eyes on the telecommunications market in China, there is no doubting its substantial growth momentum and potential. Nevertheless the market presents many contradictions. Telecommunications in China can be characterised by creativity and daring one minute, and by caution and procrastinating the next. In fact, it is often out of step with what is happening in other parts of the world. With the Beijing Olympics in 2008, telecommunications development has continued to figure prominently in the nation’s priority scheme as China prepares to showcase itself.

In a process that the western world sees as dithering, the awarding of 3G mobile licences had still not happened by early 2007 and looked as if it might not happen until early 2008. China nevertheless remains poised to become one of the world’s major next generation mobile players. But the failure of the government to act has caused considerable consternation in the wider market. Showing its determination to supporting the locally developed TD-SCDMA platform, it appeared that China would eventually adopt and license all three 3G standards, but that TD-SCDMA would some how be given a head start in the market. In fact by early 2007, it was looking as if China Netcom had been given an ‘unofficial’ licence to start rolling out a TD-SCDMA network.

The other big issue for China, the restructuring of the country’s major telecom operators, has seen high expectations of imminent government action dashed. It was still looking as if the government would move on this in conjunction with the 3G licensing. But by early 2007, not much had happened - except for the constant manoeuvring and positioning. Most of this focused on China Unicom, which was tipped to be split up as part of any restructuring process.

Key highlights
China has the world’s largest mobile subscriber base, passing 450 million in early 2007; in addition to this there were more than 90 million ‘Little Smart’ limited mobility services.

The country’s largest mobile operator, China Mobile, is the world’s largest in terms of subscribers; having passed 300 million in December 2006, it was still growing at more than 20% coming into 2007.

While overall broadband Internet penetration remains low (4%), the number of broadband customers passed the 55 million mark in early 2007.

China is ranked number two in the world behind the US in the number of broadband subscribers and is on track to become the world’s largest broadband market.

China already has the highest number of DSL subscribers in the world (37.1 million subscribers by end-2006, followed by the US with 25.7 million).

China has the largest number of fixed-line subscribers and VoIP users in the world.

China has the largest cable TV network in the world.

China’s terrestrial TV services reach approximately 95% of its 380 million households.

In its push for digital TV, the Chinese Government intends to end analogue TV broadcasts by 2010.

Preparation for the 2008 Beijing Summer Olympics were continuing in earnest into 2007.

Mobile and limited mobility subscriber growth in China - 1995 - 2008

Year Mobile (million) Limited mobility*(million) 1995 3.6 -
1996 6.8 -
1997 14.0 -
1998 23.8 -
1999 43.0 -
2000 86.5 -
2001 145.0 -
2002 206.6 10.5
2003 268.6 31.0
2004 317.2 61.2
2005 392.0 85.7
2006 445.8 91.0
2007 (e) 520.0 95.0
2008 (e) 600.0 100.0

(Source: BuddeComm based on industry data) Note:*Limited mobility based on Personal Access System (PAS) services.

1. KEY STATISTICS
2. TELECOMMUNICATIONS MARKET
2.1 Overview of China’s telecom market
2.2 Fixed-line and mobile phones in China
2.2.1 Fixed-Mobile Convergence (FMC)
2.3 China’s Tenth Five Year Plan
2.3.1 Budget for Information and Communications Technology (ICT)
2.4 Preparations for the 2008 Beijing Summer Olympics
2.5 Market highlights
2.5.1 Year 2006
2.5.2 Year 2005
2.5.3 Year 2004
2.5.4 Year 2003
3. REGULATORY ENVIRONMENT
3.1 Overview
3.2 Regulatory authority
3.2.1 Ministry of Information Industry (MII)
3.3 State Standardization Administration
3.4 State Telecommunications Management Commission
3.5 Competition
3.6 Liberalisation
3.6.1 Qualified Foreign Institutional Investor (QFII)
3.7 Restructuring of the telcos in China
3.7.1 Break up of China Telecom
3.8 World Trade Organization (WTO) accession
3.8.1 Final concessions
3.8.2 Foreign investment after WTO accession
3.8.3 Initial impact
3.9 Telecom regulatory legislation
3.9.1 Role of the MII
3.9.2 Operators
3.9.3 Foreign participation
3.9.4 Private Bank Exchange (PBX) operators
3.9.5 Service quality and universal service
3.9.6 Service charges
3.9.7 Other issues
3.10 Tariffs
3.11 Calling-Party-Pays (CPP)
3.12 Service quality
3.13 Telecom equipment market regulations
3.13.1 Telecom equipment Network Access Licence
3.14 Reorganisation of fee structures
3.15 Yearly summaries of major regulatory developments
3.15.1 Year 2006
3.15.2 Year 2005
3.15.3 Year 2004
3.15.4 Year 2003
4. MAJOR TELCOS
4.1 Overview of major players
4.1.1 Analysis - business restructuring in China - January 2007
4.1.2 Analysis - China’s Telecoms industry restructuring - April 2007
4.2 China Mobile
4.3 China Netcom
4.3.1 China Netcom IPO
4.3.2 Jitong Corporation
4.4 China Satcom
4.5 China Telecom
4.6 China Tietong (formerly China Railcom)
4.7 China Unicom
5. TELECOMMUNICATIONS INFRASTRUCTURE
5.1 Overview of infrastructure developments in China
5.1.1 Official condemnation of redundant network construction
5.1.2 Analysis - China’s telcos need structural separation - January 2007
5.2 Regulatory issues
5.2.1 Tenth Five-Year Plan
5.3 National telecom network
5.3.1 Backbone Internet networks
5.4 International infrastructure
5.4.1 Submarine cable infrastructure
5.4.2 Satellite infrastructure
5.5 Fibre-to-the-Home (FttH)
5.5.1 Market overview
5.5.2 Gigabit Ethernet/Fttx+LAN
5.6 Broadband over Power Line (BPL)/powerline communications (PLC)
5.7 Next Generation Networks (NGNs)
5.7.1 World’s largest NGN in the works
5.7.2 China Railway fibre network
5.7.3 High-speed network technologies
5.7.4 Data and Multi-Media Communications Network
5.8 IP-Virtual Private Network (IP-VPN)
5.8.1 Growth of IP-VPN in China
5.8.2 Peer-to-Peer (P2P) streaming
5.8.3 International Ethernet private line (IEPL)
5.9 IP telephony/Voice over Internet Protocol (VoIP)
5.9.1 Market overview
5.9.2 Equipment developments
5.9.3 Major VoIP networks
5.10 Telecoms & IT
5.10.1 Data communications
6. BROADBAND AND INTERNET MARKET
6.1 Broadband market
6.1.1 Overview
6.1.2 Broadband service providers
6.1.3 Broadband networks overview
6.1.4 Cable modems
6.1.5 Digital Subscriber Line (DSL)
6.1.6 Fibre-to-the-Home (FttH)
6.1.7 Broadband over powerline (BPL)
6.1.8 Wireless broadband
6.2 Internet market
6.2.1 Overview
6.2.2 Internet statistics
6.2.3 E-services
6.2.4 E-commerce
6.2.5 Regulatory issues
6.2.6 Internet regulations and censorship
6.2.7 E-payment systems
6.2.8 E-government
6.2.9 E-entertainment
6.2.10 E-publishing
6.2.11 Instant messaging (IM)
6.2.12 Search engines
7. CONVERGENCE
7.1 Overview of media convergence
7.2 Triple play models
7.3 Digital TV
7.3.1 Broadband TV
7.3.2 Digital cable TV
7.4 Television broadcasting in China
7.5 Satellite TV
7.5.1 Market overview
7.5.2 Regulatory issues
7.5.3 Multichannel Multipoint Distribution Systems (MMDS)
7.5.4 Major satellite TV players
7.6 Digital terrestrial TV (DTTV)
7.6.1 Market overview
7.6.2 Regulatory issues
7.6.3 Hong Kong’s concerns over mainland terrestrial digital TV
7.6.4 Cost concerns over terrestrial digital TV in China
7.7 Interactive TV
7.7.1 Market overview
7.7.2 Selected interactive TV players
8. MOBILE COMMUNICATIONS
8.1 Overview of China’s mobile market
8.1.1 Analysis - prevalence of mobile phones in China’s city centres
8.1.2 Statistical overview
8.2 Regulatory issues
8.2.1 Price wars
8.2.2 Subscriber registration
8.2.3 Calling Party Pays (CPP)
8.3 Mobile technologies
8.3.1 Market overview
8.3.2 GSM
8.3.3 Code Division Multiple Access (CDMA)
8.3.4 Personal Access System (PAS)/Personal Handy System (PHS)
8.3.5 Third Generation (3G) mobile
8.3.6 Fourth Generation (4G) mobile
8.3.7 Mobile handsets
8.4 Major mobile operators
8.4.1 Overview
8.4.2 China Mobile
8.4.3 China Unicom
8.4.4 Other mobile operators
8.4.5 Mobile multimedia alliance
8.5 Mobile voice services
8.5.1 Prepaid cards (SIM and PIM cards)
8.5.2 Satellite mobile
8.6 Mobile data services
8.6.1 Market overview
8.6.2 Short Message Service (SMS)
8.6.3 Multimedia Messaging Service (MMS)
8.6.4 Wireless Application Protocol (WAP)
8.6.5 General Packet Radio Service (GPRS)
8.6.6 Push-to-Talk (PTT)
8.6.7 Enhanced Data for GSM Evolution (EDGE)
8.6.8 Broadband wireless data services
8.6.9 BlackBerry
8.7 Mobile applications
8.7.1 Market overview
8.7.2 Global positioning systems (GPS)
8.7.3 M-commerce
8.7.4 Mobile Video-on-Demand (VoD)
8.7.5 Mobile gaming
8.7.6 Instant Message (IM) search function
8.7.7 Ringtones
8.7.8 Push email
9. GLOSSARY OF ABBREVIATIONS
Exhibit 1 - China’s agreed schedule for telecom liberalisation
Exhibit 2 - Restructuring - scenario 1
Exhibit 3 - Restructuring - scenario 2
Exhibit 4 - Selected Chinese satellite service providers and satellites
Exhibit 5 - China Satcom’s satellite fleet
Exhibit 6 - ‘Enemies of the Internet’ - December 2005
Exhibit 7 - Types of telecom convergence
Exhibit 8 - BesTV Corporation
Exhibit 9 - Jiangsu Province
Exhibit 10 - Jiangsu IPTV application
Exhibit 11 - Overview of ‘eye will’
Exhibit 12 - Restructuring - scenario 1
Exhibit 13 - Restructuring -cenario 2


Table 1 - Mobile and limited mobility subscriber growth in China - 1995 - 2008
Table 2 - Country statistics China - 2006
Table 3 - Telecom revenue and investment statistics - 2005
Table 4 - Telephone network statistics - September 2006
Table 5 - Internet user statistics - 2006
Table 6 - Broadband statistics - 2006
Table 7 - Mobile statistics - 2006
Table 8 - National telecommunications authorities
Table 9 - Fixed-lines, mobile subscriptions and penetrations - 1998 - 2006
Table 10 - Fixed lines in service and penetration - 1998 - 2006; 2010
Table 11 - Distribution of bandwidth (Mb/s) - 2003 - 2006
Table 12 - Overview of regional/international fibre optic cable networks
Table 13 - Public data and multimedia users - 1998 - 2000; 2005; 2010
Table 14 - Broadband subscriber growth - 2000 - 2007
Table 15 - Broadband subscribers and annual growth by access type - 2006
Table 16 - Broadband subscribers and households - 2006
Table 17 - Cable modem Internet subscribers - 2000 - 2007
Table 18 - DSL Internet subscribers - 2000 - 2007
Table 19 - CNNIC Internet survey - 2005
Table 20 - Internet users - 1996 - 2007
Table 21 - Internet subscribers - 1995 - 2007
Table 22 - Registered domain names by code - February 2007
Table 23 - Internet provider statistics - 2006
Table 24 - Share of China’s online search market - 2005 - 2006
Table 25 - Jiangsu Telecom broadband users - 2002 -2006
Table 26 - Broadband service revenue - 2002 - 2006
Table 27 - Overview of cable TV market - 2006
Table 28 - Cable TV household growth - 1996 - 2006
Table 29 - Mobile subscribers by operator and annual change - 2006
Table 30 - Mobile subscriber growth - 1995 - 2007
Table 31 - Little Smart subscribers - 2002 - 2007
Table 32 - Prepaid mobile subscribers by operator - 2005

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